Page 268 - COSO Guidance Book

controls. The board of directors (those charged with governance) reviews an executive summary of
the report and makes inquiries concerning what actions, if any, will be taken by the entity to mitigate
any noted risks.

 Point of focus — Provides separate communication lines

Separate communication channels, such as whistleblower hotlines, are in place and serve as fail-safe
mechanisms to enable anonymous or confidential communication when normal channels are
inoperative or ineffective.

As noted previously, a whistleblower hotline could be established and maintained within the entity.
Alternatively, the whistleblower hotline could be outsourced to a third party.

 Point of focus — Selects relevant method of communication

The method of communication considers the timing, audience, and nature of the communication as
well as legal, regulatory, and fiduciary requirements and expectations.

Knowledge check

2. The characteristics of quality information is associated with which principle of the information and
communication component of internal control?

a. Uses relevant information.
b. Communicates internally.
c. Communicates externally.
d. Enables inbound communication.

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